WARRANT TO PURCHASE __________ SHARES OF COMMON STOCK
SGI INTERNATIONAL INCORPORATED UNDER THE LAWS OF THE STATEOF UTAH
"The securities represented by this Certificate have notbeen registered under the Securities Act of 1933 or any state securitieslaw and may not be sold, exchanged, hypothecated or transferred in anymanner except in compliance with Paragraph 4 hereof."
1.         ***Grantof Warrant***. This certifies that, effective April 4, 2001, ___________,the registered holder hereof (the "Warrantholder"), is entitled to purchasefrom SGI International, a Utah corporation (the "Company"), at any timeduring the Exercise Period as defined in Paragraph 2 hereof, at the purchaseprice per Share of $____ (the "Warrant Price"), the number of shares ofcommon stock, no par value, of the Company set forth above (the "Shares"),subject to the terms and conditions set forth herein.(a)       **Formof Payment.** The payment of the aggregate Exercise Price for the Sharesto be issued upon exercise of this warrant, including the method of payment,was determined by the Board at the time of grant, which may consist atthe option jointly of the Warrantholder and Company, entirely of: (1) cash;(2) check;(3) promissory note;(4) other Shares which have a Fair Market Value on thedate of surrender not less than the aggregate exercise price of the Sharesas to which said Warrant shall be exercised;(5) delivery of a properly executed exercise notice togetherwith such other documentation as the Board and the broker, if applicable,shall require to effect an exercise of the Warrant and delivery to theCompany of the sale or loan proceeds required to pay the exercise priceor the use of such other procedures which shall effect a cashless exercise;(6) any combination of the foregoing methods of payment;or(7) such other consideration and method of payment forthe issuance of Shares to the extent permitted by Applicable Laws. (b)         **Tenderof Stock.** Notwithstanding the foregoing, the Warrant may not be exercisedby tender to the Company of Shares to the extent such tender of Shareswould constitute a violation of the provisions of any law, regulation,or agreement restricting the redemption of the Company's stock. The Warrantmay not be exercised by tender to the Company of Shares unless such Shareseither have been owned by the Warrantholder for more than six (6) monthsor were not acquired, directly or indirectly, from the Company unless approvedby the Board and in compliance with Applicable Laws, including Rule 16b-3.2.         ***Exerciseof Warrant***. The Warrant evidenced hereby may be exercised on orafter the earlier of (i) a date one (1) year from the date of grant, or(ii) upon the effective state and federal registration of the common sharesunderlying the warrant, in whole or in part, by presentation of this Warrantcertificate with the Warrant Exercise
Form attached as Exhibit A-1 hereto, duly executed andsimultaneous payment of the Warrant Price at the principal office of theCompany. The "Exercise Period" shall be the earlier of the period of timecommencing on registration of the underlying shares with the State of Californiaand the SEC or one year after the date this Warrant is executed by Companyand ending on December 31, 2006.
3.         ***Legendon Shares***. Each certificate for Shares issued upon exercise ofthe Warrant shall bear the following legend, unless, at the time of exercise,such Shares are subject to a currently effective Registration Statementunder the Securities Act of 1933 (the "Act"):"The securities represented by this Certificate havenot been registered under the Securities Act of 1933 or any state securitieslaw and may not be sold, exchanged, hypothecated or transferred in anymanner except in compliance with Paragraph 4 of the Warrant pursuant towhich they were issued." Any certificate issued at any time in exchange or substitutionfor any certificate bearing such legend (except a new certificate issuedupon completion of a public distribution pursuant to a Registration Statementunder the Act) shall also bear the above legend, unless Warrantholder furnishesan opinion of legal counsel acceptable to Company, that the securitiesrepresented thereby need no longer be subject to such restriction. This Warrant and the Common Stock underlying its exercise,are restricted and there is no agreement that either will be registeredunder the Securities Act of 1933. However, the Common Stock underlyingthe exercise of this Warrant shall be included in the next RegistrationStatement filed by Company with the SEC, and/or in the next Form S-8 filedby Company with the SEC.4.         ***Restrictionson Transfer; Registration Rights***. By acceptance of this Warrant,the Warrantholder agrees that prior to making any disposition of the Warrant,the Warrantholder shall give written notice to the Company describing brieflythe manner in which any such proposed disposition is to be made; and nosuch disposition shall be made unless Warrantholder provides Company withan opinion of legal counsel acceptable to Company that a Registration Statementor other notification or post-effective amendment thereto under the Actis not required with respect to such disposition, or unless such a RegistrationStatement has been filed by the Company with, and declared effective, ifnecessary, by the Securities and Exchange Commission.
5.         ***Reservationof Shares Issuable on Exercise of Warrants***. The Company will atall times reserve and keep available out of its authorized Shares, solelyfor issuance upon exercise of this Warrant and other similar Warrants,such number of Shares as from time to time shall be issuable upon the exerciseof this and all other similar Warrants at the time outstanding.
6.         ***WarrantholderNot a Shareholder***. The Warrantholder, as such, shall not be entitledby reason of this Warrant to any rights of a shareholder of the Company.
7.         ***Notices***.Any notice pursuant to this Warrant shall be in writing and shall be deemedto have been duly given if delivered or mailed, by certified mail, returnreceipt requested:(a) If to Warrantholder, addressed to it at its addressas set forth in the Warrant Register maintained by the Company;(b) If to the Company, addressed to it at 1200 ProspectStreet, #325, La Jolla, California 92037, attention: Investor Relations.Warrantholder and/or Company may from time to time changethe address to which notices are to be delivered or mailed hereunder, bygiving notice to the other in accordance herewith.
8.         ***Successors***.The provisions of this Warrant are by and for the benefit of the Companyand Warrantholder and their respective heirs and/or successors hereunder.
9.         ***ApplicableLaw***. This Warrant shall be deemed to be a contract made under thelaws of the State of California and for all purposes shall be construedin accordance with the laws of said State.
10.         ***ThirdParty Beneficiaries***. The provisions of this Warrant shall be forthe sole and exclusive benefit of Company and Warrantholder, and nothingherein shall be construed to give to any person or corporation other thanCompany and Warrantholder, and their heirs, any legal or equitable right,remedy or claim, under this Agreement.
11.         ***InvestmentIntent of Warrantholder***. Notwithstanding anything herein to thecontrary, this Warrant is issued subject to the following conditions: (i)that the Warrant has been acquired for the account of Warrantholder andnot with a view to, or for sale in connection with, any distribution thereof;(ii) that Warrantholder will forthwith execute and deliver to Company anInvestment Letter reciting and confirming the substance of clause (i) hereof;and (iii) that Company may unilaterally cancel this Warrant upon the failureof Warrantholder to execute and deliver any document requested by Companywithin thirty (30) days of a written request to do so.
SGI INTERNATIONAL 
By: _______________________               (Authorized Officer)